Is the Subscription Economy over?
This is the first article of The Total Monetization Series, a new series in which we will challenge this community to think beyond subscriptions and embrace a comprehensive monetization strategy.
It’s not looking too good for subscriptions right now: News sites are dropping their paywalls , streaming services are turning to ads (and into cable ), and there’s even noise of SaaS companies abandoning the model .
What’s going on?
Over a decade ago, this community heralded the shift to the Subscription Economy as the future of business, with its customer-centric mindset and recurring relationships and revenue. Fast forward to 2024, let me just officially declare what we all know, we are through the shift. We’re on the other side. You, this community, helped create this new world — and it’s become our new normal. These new “customer-centric” business models, including subscriptions, are now ubiquitous.
But a year ago, a new phrase entered our lexicon: subscriber fatigue. Consumers are overwhelmed with the multitude of subscriptions they're expected to maintain. Some businesses discovered that they have more SaaS applications than employees. Everyone is reassessing the value they get from these products. Profits are down. Churn is on the rise.
So does this mean the Subscription Economy is over??
Of course not. It’s simply entering a new phase. And with a new phase comes new challenges, new ideas. The conversations we’ve been having with this community have been so exciting, so fresh, that after a year hiatus, we’re bringing back the Subscribed newsletter! It’s time to put the cape back on.
We now stand at an inflection point. Customers have outgrown this first wave of services. A market shakeout is happening in many saturated segments. As businesses are looking for a way to navigate this inflection point, some are doing one absolutely wrong approach: Reacting by raising prices . That isn’t sustainable and could actually make matters worse.
To actually have staying power in this increasingly competitive, dynamic, evolving landscape, modern businesses need a different approach. They need to focus on monetization, which is how a business matches what it values with what its customers value, takes that to market, and generates revenue from it.
Today, simply having a subscription model or any other single static model, is no longer enough. It’s not enough to guarantee market share, growth, brand loyalty, or sustained competitive advantage. But there’s a better path forward. When you look at The New York Times, Zoom, HubSpot, and GoPro, there’s a new strategy emerging.
So what do these strategies have in common?
1. They show an understanding that monetization is bigger than any singular pricing model.
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2. These strategies are all living and have the ability to evolve over time.
3. And lastly, they addressed root questions: Why did they buy? How did they get value? Why did they churn?
These stories all point to a new emerging strategy, one that continuously evolves monetization with demand. We call this strategy: Total Monetization.
Total Monetization is a strategy that is both customer-centric and future-proof. Total Monetization can take shape in numerous ways, including bundling and unbundling subscriptions, offering consumption-based pricing alongside subscription models, one-off top-ups, freemium products, and per-use credit systems.
These are some of the stories we’ve returned to tell. And if we haven’t made it clear enough yet, no, the Subscription Economy is not over. In fact, the ideals of the Subscription Economy are still holding strong, but companies need a new strategy and we want to tell you all about it.
In the coming weeks, we’ll dive deeper into this concept of Total Monetization. We’ll explain how businesses are losing because of their static, supply-driven strategies. We’ll introduce companies that are winning with evolving, demand-driven ones, and walk you through emerging models that will set you up for success. So stay tuned!
We also want to hear from you: What are your initial thoughts? Does this resonate with you? Drop me a line!
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Disclosure: These opinions expressed are mine, not those of the company. The companies mentioned in this newsletter are not necessarily Zuora customers.
Growth Advisor ↗? I help Founders/CEOs drive profit, lead gen and growth with Enterprise Growth Structures (EGS) and the top talent in the Philippines. Forbes Top 11 Impactful Female Leaders. Top 150 Real Leaders 2024.
4 个月Great read!
Making Tech easy for Non-Tech founders by coaching & guidance?? | Helping founders build SaaS Solutions from ideas ??| Founder @ Desuvit AS | Co-founder CTO @ Betty24 GmBH
7 个月?Monetization is key for sustainable subscriptions. Excited to see Subscribed Weekly delve into this topic .Best Tien Tzuo
Very thoughtful post Tien Tzuo - question why do you think on-prem software is trading at higher multiples than SaaS?
Senior Director @ Salesforce
8 个月This is awesome stuff Tien Tzuo! I also wondered myself when I see companies raise subscription prices if it will backfire and it sounds like I’m not alone in this opinion. One thing I always thought when I was at Zuora is how world class your market insights are. Hope this Subscribed newsletter really becomes bigger and bigger.
Global Controller at ACA Group
8 个月Fantastic article! I expect nothing less from the Zuora thought leaders! Spot on!